Amalgamated Financial's (NASDAQ:AMAL) Upcoming Dividend Will Be Larger Than Last Year's

The board of Amalgamated Financial Corp. (NASDAQ:AMAL) has announced that it will be increasing its dividend by 20% on the 22nd of May to $0.12, up from last year's comparable payment of $0.10. Although the dividend is now higher, the yield is only 1.6%, which is below the industry average.

See our latest analysis for Amalgamated Financial

Amalgamated Financial's Dividend Forecasted To Be Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end.

Amalgamated Financial has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. Using data from its latest earnings report, Amalgamated Financial's payout ratio sits at 13%, an extremely comfortable number that shows that it can pay its dividend.

The next year is set to see EPS grow by 2.9%. If the dividend continues along recent trends, we estimate the future payout ratio will be 17%, which is in the range that makes us comfortable with the sustainability of the dividend.

Amalgamated Financial Is Still Building Its Track Record

Amalgamated Financial's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2019, the annual payment back then was $0.24, compared to the most recent full-year payment of $0.40. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Amalgamated Financial has seen EPS rising for the last five years, at 15% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Amalgamated Financial's prospects of growing its dividend payments in the future.

Amalgamated Financial Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Amalgamated Financial that investors need to be conscious of moving forward. Is Amalgamated Financial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.